Why Affirm Jumped 12% Yesterday — Does the Rally Have Legs?

Core Viewpoint - Affirm Holdings is a leading player in the buy now, pay later (BNPL) sector, experiencing significant stock volatility and a recent 137% increase from April lows, closing around $73 per share after an 11.8% jump following a fireside chat with the CFO [1][2][10] Company Performance - Affirm's recent fiscal first-quarter 2026 earnings report showed strong results, with gross merchandise volume (GMV) growth exceeding expectations, bolstered by partnerships like a renewed five-year extension with Amazon and expansions with Shopify in the UK [5] - The Affirm Card, a debit card with pay-over-time features, has become a fast-growing opportunity, contributing to accelerating GMV and higher profitability due to its interest-bearing mix [5] - The company derives 96% of its transactions from repeat borrowers, who exhibit lower default rates, and has seen a shift towards higher-frequency, lower average order value transactions, maintaining incremental margins above 75% [6] Competitive Positioning - Affirm's transaction-level underwriting allows for rapid adjustments in response to stress signals, positioning it as better equipped for downturns compared to peers and traditional credit providers [7] - The company's no-late-fee model and proprietary data collection help reduce risk over time, allowing for market share growth despite potential revenue sacrifices [8] Market Sentiment and Valuation - The recent 12% stock jump is supported by the CFO's positive comments and rebuttal of volume concerns, indicating that Affirm's business remains healthy despite macroeconomic headwinds [10] - Current valuations show a P/E exceeding 100, with expectations for earnings growth at 153% annually over the next five years, reflecting high growth expectations for a newly profitable company [11]